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Paid annual leave: the right goes on

The Advocate General to the ECJ has given his opinion that, on termination, a worker is entitled to be paid for any periods of accrued but untaken annual leave that he or she has not taken because no payment would have been made for it. In his view it would be unreasonable to expect someone to take leave unpaid, and then hope they could force payment later.

Mr King was a commission only salesman for the Sash Window Workshop for 13 years. He was never paid for any holiday taken. An employment tribunal had awarded Mr King payment for leave requested, taken, but not paid. It also found he was entitled to leave accrued, but untaken, throughout the engagement. On appeal, the EAT found that he was not entitled to payment for leave accrued, but untaken, in previous years on the basis that there was no evidence that he had been prevented from taking his leave.

Mr King appealed to the Court of Appeal which referred certain questions to the ECJ. The key issue before the ECJ was whether Mr King should be paid for all accrued but untaken holiday throughout the whole period of his engagement, or whether he could only claim for unpaid leave that he actually took. The Advocate General stated that “it would seem inarguable that a worker will be deterred from exercising his right to paid annual leave if he is first required to take it without any payment at all, before then being able to establish that he is entitled to paid leave.”

The AG also considered that this right to carry over accrued but untaken leave continues indefinitely until the worker has the opportunity to exercise that right. This may result in a worker being entitled to a payment on termination for all accrued, untaken, leave throughout the entire period of the engagement.

The ECJ does not always follow the AGs opinion but more often than not it does. If it does, it will have far reaching implications for employers. For example, employers of workers in the ‘gig’ economy may have many years of unpaid holiday, a situation that has arisen largely because of the uncertainty of the status of many of those individuals. Claims for holiday back pay could be very significant and financially damaging so much there will be much interest in the ECJ’s decision which is anticipated later this year.